Docket: 1812 Murray Waters, Sylvain Cartier, Glen Hora v. Cory Martin, 2011 SKCA 53

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2011 SKCA 53 Date: 20110419 Between: Docket: 1812 Murray Waters, Sylvain Cartier, Glen Hora and Cory Martin (Plaintiffs) Appellants - and - DaimlerChrysler Services Canada Inc., United Parcel Service Canada Ltd., and United Parcel Service of America, Inc. (Defendants) Respondents Coram: Gerwing, Jackson and Ottenbreit JJ.A. Counsel: E.F.A. Merchant, Q.C. & Casey Churcko for the Appellants Jason Mohrbutter for the Respondents Appeal: From: 2009 SKQB 263

Heard: April 19, 2011 Disposition: Allowed (orally) Written Reasons: May 3, 2011 By: The Honourable Mr. Justice Ottenbreit In Concurrence: The Honourable Madam Justice Gerwing The Honourable Madam Justice Jackson Ottenbreit J.A. I.

Introduction [ 1 ] Merchant Law Group (“MLG”), counsel for Murray Waters, Sylvain Cartier, Glen Hora and Cory Martin (“the Plaintiffs”), appealed an order for costs made against it in favour of DaimlerChrysler Services Canada Inc. (“Daimler”) and United Parcel Service Canada Ltd. and United Parcel Service of America, Inc. (“U.P.S.”) (collectively “the Respondents”) arising out of an adjournment granted to the Respondents during a certification hearing on a class action. We delivered our decision allowing the appeal at the conclusion of oral argument with a promise of brief written reasons to follow.

These are those reasons. II. Background [ 2 ] The Plaintiffs are the representative plaintiffs in a class action against the Respondents. The Plaintiffs allege that they and other customers of Daimler provided confidential personal information to Daimler which Daimler stored on a data tape, which it then lost in transit while they were being shipped via U.P.S.

The Plaintiffs claim damages for the alleged mishandling and loss of the confidential person information based on negligence, breach of confidence and violation of privacy. [ 3 ] The judge below, at a conference with the lawyers for the parties, set a timetable for the filing and exchange of pleadings and documentation and for the hearing of the certification of the class action.

The timetable encompassed approximately four months, culminating with the dates for the certification hearing, set for February 18 to 20, 2009 inclusive. [ 4 ] Pleadings and documents were duly exchanged and filed and the certification hearing began February 18. At the commencement of proceedings, on the morning of the second day of the certification hearing, MLG filed an amended statement of claim which added some new causes of action and alleged that Quebec law applied. MLG wanted to proceed with the certification hearing on the basis of the amended claim, arguing (

a) that the Plaintiffs were entitled to amend their claim pursuant to the Queen’s Bench Rules , (

b) that the Respondents would, in any event, have received notice of the amendments because the Plaintiffs had referenced some or all of the substance of the amendments in their brief provided to the Respondents and filed for the certification hearing and (

c) that the judge, based on the class action jurisprudence, had to consider in any event whether the claim should be amended as part of the certification hearing process even if an amendment had not been filed. [ 5 ] The Respondents objected to the amended statement of claim on the basis that the amendments affected every aspect of the certification issues and that they were in no position to address these issues on amended pleadings of which they had no prior notice. They sought an adjournment.

The certification judge was satisfied that the Respondents would be prejudiced if the hearing proceeded on the amended claim and she adjourned the certification hearing. [ 6 ] The Respondents then each sought $10,000 costs against MLG personally representing costs thrown away, including reasonable travel costs. MLG opposed the application for costs. Argument on the issue proceeded immediately. The judge reserved the matter.

About a month after the certification hearing was adjourned, the Plaintiffs discontinued the action against U.P.S. and U.P.S. waived its outstanding request for costs arising from the adjourned hearing. [ 7 ] The judge below ultimately made an order of costs for $2500 plus the value of airfare, accommodation, and other related expenses of counsel for Daimler against MLG. She found that the amended claim failed to comply with the timetable set by the court, and that the amendments were broad, material and affected all the issues to be considered on a certification application.

She also found that MLG anticipated the amendments and chose to deliver them in the manner they did. The statement of the applicable law and the reasoning of the judge below in awarding costs against MLG is set out at paras. 24 and 25 of her decision as follows:

[24] I recognize that costs are only awarded against a solicitor in limited circumstances and I have reviewed the relevant authorities inthat regard. (See: Young v. Young, (SCC), [1993] 4 S.C.R. 3 (SCC), Martin v. Martin (1988), 61 Sask.R. 72 (Sask.Q.B.), Stromberg v. Law Society (Saskatchewan), (SK KB), [1996] 10 W.W.R. 737 (Sask. Q.B.) Here, plaintiffs’counsel’s conduct was more than discourteous to defendants’ counsel. Plaintiffs’ conduct was also more than just disrespectful toopposing counsel, and to the court and its processes.

Plaintiffs’ counsel’s conduct meets the test for awarding costs against a solicitorpersonally as set out in Young v. Young, supra, Kent v. Waldock 2000 BCCA 357; [2000] 7 W.W.R. 10, Markdale Ltd. v. Ducharme(1998, 1998 ABQB 758 , 238 A.R. 98), Stromberg v. Law Society (Saskatchewan), supra and Grasby v. Merck Frosst Canada Ltd., 2007 MBQB 42, (2007), 52 C.P.C. (6th) 200. [25] Plaintiffs’ counsel’s conduct has caused costs to be incurred to DaimlerChrysler, without reasonable cause.

Plaintiff’s counsel’sconduct wasted court time, resulted in unnecessary expense to the parties, risked prejudice to the defendants, frustrated all concerned,and resulted in the adjournment. I am satisfied that there are exceptional circumstances here and that it is appropriate to award costsagainst Merchant Law Group. Merchant Law Group must pay costs personally to reimburse the defendants for costs which they incurredas a result of Merchant Law Group’s conduct. The object is to reimburse the defendant litigants, not to punish the solicitor. III.

Analysis [8] The appeal is allowed on the bases that this Court is not satisfied that the judge below applied the appropriate test to determinewhether costs against a solicitor should be awarded and additionally that the behaviour of MLG as found by the hearing judge does notreach the legal threshold required for an order for costs to be made against MLG. [9] An award of costs against a solicitor should only be made in limited circumstances as the judge below initially correctly observed.The governing principles are set out in Young v.

Young, (SCC), [1993] 4 S.C.R. 3 and Re Hawrish (1964), (SK CA), 49 D.L.R. (2d) 464 (Sask. C.A.). In Young, McLachlin J. at pp. 135-36 stated: The Court of Appeal held that no order for costs should have been made against Mr. How. There is no need to repeat that entirelysatisfactory analysis. The basic principle on which costs are awarded is as compensation for the successful party, not in order to punish abarrister.

Any member of the legal profession might be subject to a compensatory order for costs if it is shown that repetitive andirrelevant material, and excessive motions and applications, characterized the proceedings in which they were involved, and that thelawyer acted in bad faith in encouraging this abuse and delay. It is clear that the courts possess jurisdiction to make such an award, oftenunder statute and, in any event, as part of their inherent jurisdiction to control abuse of process and contempt of court. But the fault thatmight give rise to a costs award against Mr.

How does not characterize these proceedings, despite their great length and acrimoniousprogress. Moreover, courts must be extremely cautious in awarding costs personally against a lawyer, given the duties upon a lawyer toguard confidentiality of instructions and to bring forward with courage even unpopular causes.

A lawyer should not be placed in asituation where his or her fear of an adverse order of costs may conflict with these fundamental duties of his or her calling. [emphasis in original] In Hawrish, Culliton C.J.S. at pp. 466-67 stated: I agree with the learned trial Judge that there may be circumstances in which the Court is justified in making an order for costs againsta solicitor. This question was fully considered by the House of Lords in Myers v. Elman, [1939] 4 All E.R. 484. While that decisionleaves some doubt as to whether such an order is punitive or compensatory or both (vide Wilkinson v.

Wilkinson, [1963] P. 1), it decidedthat only where there has been a serious dereliction of duty by the solicitor does the Court have jurisdiction to order him to pay the costsof proceedings personally. In Edwards v. Edwards, [1958] 2 W.L.R. 956, Sachs, J., after referring to Myers v.

Elman, supra, at p. 964,said: It is, of course, axiomatic, but none the less something which in the present case should be mentioned, that the mere fact that thelitigation fails is no reason for invoking the jurisdiction: nor is an error of judgment: nor even is the mere fact that an error is of an orderwhich constitutes or is equivalent to negligence.

There must be something that amounts, in the words of Lord Maugham, [1940] A.C. 282at 292, to "a serious dereliction of duty," something which justifies, according to other speeches in that case, the use of the word "gross."It is not, however, normally necessary to establish mala fides or other obliquity on the part of the solicitors; though it may be that if malafides is established that might turn the scale in a particular case. . . [emphasis mine] [10] The test to be applied is not that counsel’s conduct is more than discourteous and disrespectful to opposing counsel, the court andits processes, although such behaviour can certainly not be condoned and may be a component in the totality of circumstances whichmeets the tests in Young and Hawrish.

The behaviour of MLG was not measured by the judge below against the legal threshold ofserious dereliction of duty or behaviour in accordance with the controlling authorities. [11] Additionally, the impugned conduct of MLG, described by the judge as causing costs to be incurred without reasonable cause,wasting court time, resulting in unnecessary expense, risking prejudice to the Respondents and frustration to all concerned, does not, inthis case, rise to the high level of censurable behaviour which Young and Hawrish contemplate so as to allow costs to be awarded againstMLG.

This is not to say that conduct such as described should not be subject to censure. [12] The unfortunate consequences described by the judge at para. 25 of her decision are often the usual result of a litigation step or

adjournment which is taken late or without notice. In such a case, in matters other than a class action, a judge would have been entirely justified in making the costs award against the Plaintiffs based on their behaviour. However, the power to order costs in a class action is circumscribed, but not removed entirely by, s. 40 of The Class Actions Act , S.S. 2001, c. C-12.01. [ 13 ] The appeal is allowed and the order for costs is set aside. There will be no order for costs of the appeal and no order for costs on the application to file amended factums and appeal book.